Only 0.15% of players account for half of free-to-play game revenue

Free-to-play gaming has always been contentious, and a number of high-profile flameouts have illustrated the difficulty of getting the model right. The recent re-launch of the cherished Dungeon Keeper franchise is an excellent lesson in how to treat a title. EA chose to morph its classic, beloved dungeon strategy game into an F2P abomination that practically required in-app purchases for something as simple as creating a new room inside the dungeon.

Unfortunately, a new report from industry analyst firm Swrve indicates that companies are far more likely to ramp up the pressure to buy in-game products rather than reduce it. The company’s data regarding in-app purchases indicates that while only a fraction of players actually spend money on a game, only a fraction of that fraction actually contribute significantly to the bottom line. Only 49% of players even make a single purchase in a game.

Data also indicates that 60.2% of a player’s total spending occurs in the first 24 hours after downloading a game. Players who are going to make a second purchase typically make it an hour and 40 minutes after the first. By day three (of 14 tracked), players had already spent nearly 75% of the total money they’d spend in-game, assuming they spent any.

The downside of the microtransaction business model

I have no reason to doubt the accuracy of Swrve’s data, but the conclusions it leads to are rather depressing. Pick your favorite classic game — from Halo or Mass Effect, to Civilization, Final Fantasy, or Doom. Now imagine getting to your first boss and, instead of trying to figure out a strategy for killing it, getting pinged for your credit card number.

The problem is, according to Swrve’s data, these are the sorts of transactions that get people buying. Hit people once they’re engrossed, then hit them again a little farther on. The report recommends introducing products that cost more than $50 in game, because while only a tiny fraction of people buy them, they account for a whopping 9% of total revenue.

See this? This is what “fun” looks like.

There’s nothing wrong with microtransactions intrinsically, but the temptation to deliberately build not-fun gameplay that’s then alleviated by purchasing widgets is overwhelming. There’s no need to make the level grind balanced — not when players can buy 50% Bonus XP for $4.99. Are current weapons underpowered? Sell HyperPower Ammunition, or screen-clearing bombs for just 10 cents a shot. Gamers, meanwhile, have reacted poorly in a handful of truly egregious cases, but there’s no way to consistently ding players for money without constantly breaking the game’s overarching narrative.

This may not matter much in a game like Angry Birds, where every level can be beaten, but games that impose arbitrary time limits between rounds or only allow you to complete a single action at a time deliberately put enjoyment itself behind a paywall. Unfortunately, all of the data in this report points towards an engagement model that emphasizes short-term gain over long-term play. If you’ve already extracted 75% of the estimated value of your playerbase within three days, then you’ve got little incentive to work towards creating a better, more-balanced title.

That may be part of why the vast majority of mobile games offer forgettable, simple experiences. It’s hard to convince someone they’re an epic hero, evil villain, or world-conquering strategic mastermind if they have to buy power-ups every six hours for just $2.99.

The worst part of all this, though, is that such brittle reliance on a handful of people means that game developers have very limited freedom to explore or innovate within a model. If your revenue stream depends on a fraction of your players, then the desires of those players have to be catered to — even if they aren’t the group you intended to attract or push for game elements that you, the designer, don’t find attractive. The fire-and-forget mentality makes it more difficult to create long-term value around a game or IP — after all, who can risk innovating on a known formula when those innovations might damage the business model?

Tagged In

I am just disgusted by the reasoning behind a typical successful freemium model..the whole thing is a very telling case in point about the shallowness and greed over vision and objectivity, of human nature.

The model is focused on the extreme minority of people crazy enough to pay beyond ridiculous sums for certain items..Instead of focusing on normal, reasonable users who WOULD pay a fair price for the given value.

Let’s make an alternative hypothetical assumption with a high quality free game that managed to do 100 million downloads.
Now let’s say the whole sum you can spend on the IAP within a game is around 5 DOLARS ONLY, with even one buck giving you total unlock of the game.

Now ask your self, would it be crazy to expect an average sum per player to reach half a dollar?
That’s already 50 million in revenue and tens of millions of grateful, happy players!

kroozin

I guess that would depend on the original intent of the game developer. We’re all capable of doing the math, but if everyone knew of a fail-proof business model then we’d all be rich. I think the stats are interesting. :)

frederigoxcz305

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SuperTech

I still laugh every time I read an article like this that refers to mobile gaming as ‘gaming’.
A true gamer’s primary platform is not a mobile one.
If more than 40% (or more) of your gaming takes place on a mobile device (looking at you smart phone users), and you think you are a ‘gamer’, you need to go to room and rethink your life.

Justin

I can see your point, but the world has migrated away from traditional PC’s. I see my 3 yr old going to town on his subway surfer game on his tablet and he’s competing vs other ppl I know through my facebook. Would I consider that gaming? I think the answer is yes. There are many different types of games, and I think you are caught up in the distinction in genres. Personally, I prefer strategy based games, but also enjoy some first person shooter.

Al Simons

your 3 year has a tablet? when i was a kid, we had a family computer, wtf are you doing man?

Justin

We were born in different times. Clearly he’s not allowed to play on it all day, but overall it’s been really helpful in teaching him things. For example, he’s learning to read and word association. Some games focus on Math, others focus on creativity.

Al Simons

Well i cant argue with that, thanks for making me feel like an asshole.

Justin

Not an asshole, since there are parents out there that let their kids play these violent or inappropriate games unsupervised and/or use the device as a baby sitter. It’s good to question, because that’s technology’s crux; it can be both good and bad.

Al Simons

Well i cant argue with that, thanks for making me feel like an asshole.

darkich

So by your reasoning mobile games aren’t games.
Brilliant

SuperTech

Those are your words. Not mine. I never said that.
Mobile games ARE games. Perhaps you should learn
how to read before replying out of your a**.

CharlieFox

You did imply that however.

But if you are so technical in your argument, please explain how people playing mobile games are not gamers since a gamer is considered as someone playing a video game.
Console, PC, portable is irrelevant as long as its considered a game. The platform only dictates the hardware, graphics, method of input/output, portability, multiplayer, etc. Would Angry Birds or Candy Crush on PC/console be considered gaming by your standards then?

SuperTech

I still laugh every time I read an article like this that refers to mobile gaming as ‘gaming’.
A true gamer’s primary platform is not a mobile one.
If more than 40% (or more) of your gaming takes place on a mobile device (looking at you smart phone users), and you think you are a ‘gamer’, you need to go to room and rethink your life.

JD Rahman

Does Swrves data consider games like TF2 or DOTA 2? Games where purchases are entirely aesthetic and don’t have an effect on gameplay?

I know people playing these games who continuously purchase items like hats and announcers. Is the Swerve data MMORPG specific? Games with an item and level grind.

Singh1699

Probably skewed by lol as well. Saw someone who spent over 1000 on it.

Al Simons

i have spent 200 usd for dota 2, im addicted.

Singh1699

Buy a vape, and some herb. 0.5 will last you three weeks even if you use it everyday.

Much better addiction.

Al Simons

Im not 15 years old.

Singh1699

I know, you most likely want to kill some time, meditate, relax or unwind.

Al Simons

not really, i like to work, think and drink alcohol.Smoking weed is for underaged kids who can only get their hands on certain drugs like cannabis or synthetic drugs.

JD Rahman

Does Swrves data consider games like TF2 or DOTA 2? Games where purchases are entirely aesthetic and don’t have an effect on gameplay?

I know people playing these games who continuously purchase items like hats and announcers. Is the Swerve data MMORPG specific? Games with an item and level grind.

Phobos

I actually find those type of games disgusting, free to paly. Free my ass.

Phobos

I actually find those type of games disgusting, free to paly. Free my ass.

standard

What gets me down is that they feel the need to break their game and trick you into paying to fix it.
What gets me down more is that model exists because you can’t trust enough people ask them to contribute based on how much they’re enjoying your full free game.

Robert Foy

Play World of Tanks or War Thunder, they got the F2P model right. You can play just fine without spending money, its just slower to “progress”. Or Path of Exile or Guild Wars 2. Or even Mechwarrior and especially Planetside 2. They have the perfect F2p models. And none of them are losing money nor do they break the game to make you pay for it. And they are making money. All of the F2P models that are mentioned in the article are not making money because they lack the IQ to see the game from the perspective of the player OR to even look at the games that are F2P and are doing great.

But this is the subhuman, mentally inferior troglodytes of EA we are talking about here, the same mentally deficient incompetents who thought that SimCity fans wanted SMALL cities and not LARGE cities.

So yeah, fuck EA and all of the idiots trying to reinvent the wheel that was already invented by superior companies who make a superior product and result in superior money making and STILL letting the free players play just fine.

TL;DR: Look at the SUCCESSFUL F2P games, and copy that, because if your in a giant corporation like EA, you aint got any ideas of your own and you never will. The smaller game companies have the people with the higher IQs, the big corporations HEMORRHAGE the smart people and those people go elsewhere. You would think people would remember EA buying out Westwood (Command and Conquer) and Bioware (KOTOR and Mass Effect) and those studios going to absolute shit when the smart ones left (SWTOR anyone?).

Oh, and again, I reiterate: Fuck EA.

EDIT: as someone said in one of the other comments, TF2 and DOTA2 are prime examples of superior F2P games that don’t break the game, yet make SHITLOADS of money. As I said, the morons at the companies who keep trying to reinvent the wheel need to buy some IQ points and look at the game companies that are doing gangbusters.

darkich

Yeah but it must be said that you are wrong about the profitability..

Look at the App Store and Google Play revenues..90 % comes from freemium games.
Top freemium games such as Clash of Clans and Candy Crush have earned HUNDREDS of millions of dollars, multiplying their budgets by unprecedented amounts.

As for EA, all their high budget f2p mobile games are highly profitable, sadly.
I can tell you that FIFA 14 earned hugely on mobile, gaining more downloads than all previus FIFAS combined..Real Racing 3 earns about 5-10 million a month, and so is the Simpsons game.

AAA f2p titles of other studios such as Injustice God’s among us have also been successful

Robert Foy

Ah, I stand corrected. But bare in mind I was talking about PC gaming mainly. But it is sad the way you pointed out :-/

Dozerman

Has anyone tried a competition style system where you buy-in with virutal or real money and the player that wins gets a 90% (pick an arbitrary number above 50) cut of pay-ins while the dev keeps the rest? It seems like a style that would bring in more players with the allure of winning money and also spur on in-game purchases at the same time.

Joel Detrow

Digital Extremes has certainly not fallen prey to “the temptation to deliberately build not-fun gameplay that’s then alleviated by purchasing widgets” as the actual gameplay of Warframe is super fun. They started with a core model of “fun, varied gameplay” and have built up the leveling and lore around that model. It’s still technically in beta, as some elements are still placeholders, but it’s absolutely fun as hell. They’ve done free-to-play right, IMO – make a good enough game, and people will throw their money at it out of sheer gratitude (well, also to get cosmetic items, but mostly gratitude!).

Lazy Poet

This makes me so happy. Maybe this will kill F2P. Either way it’s a stupid move for game companies. People play F2P games primarily for two reasons. They’re cheap or their too rich to have time to play better games. As the article suggests most people are cheap. Those people aren’t going to play a game where they can’t have fun without spending money. I personally like models that make it so their game is completely beatable but much easier if you pay money. Then you get your money from the rich and the weak willed and people like me have more Mario-esque fun (back when games made you want to put your GB through the garbage disposal but got you so hooked that you’d keep playing the same level over and over trying to avoid that one pitfall.)

vladx

The only “real” F2P game is League of Legends imo, the rest including World of Tanks gets you a gameplay advantage by spending money on stuff…

Al Simons

no, dota 2 is the only free to play game..if you want to unlock champs in league then you have to pay or spend countless hours trying to unlock new champs.

David Delisle

The results don`t surprise me but they comprise EA the company that spectacularly fail to understand it`s own customer bas years after years. I would really like to see the data from League of legends I bet it’s quite different.

Al Simons

so you are meaning to tell everyone that 0.15 percent of people make up the revenue of free to play games? please explain how valve accumulated 80 million usd from a small percentage of their dota 2 player base in 2013…im guessing you are referring to mobile games…if so then dont tag this as pc gaming or free to play and dont post a picture of dota 2 or other free to play steam games.Your cookie cutter data is flawed ..especially since the data is specifying mobile games and it isnt specifying any details of games or pc games.I would recommend getting some reliable data before embarrassing yourself in the future.

Chaotic Entropy

There’s the uncomfortable cross-over of when a classic PC game is “ressurected” on a mobile platform, ala Dungeon Keeper. Because it’s easier to make some casual, cashcow tat than actually utilise your IP.

Chaotic Entropy

What aggravates me is when a decent non-MMO franchise gets in to the MMO business. Thereby killing off the original incarnation of their game, in favour of a FTP cashcow that seeks to capitalise on your affection for the previous game series whilst you suffer the lackluster MMO.

Successful RTS series? Make it an MMO. Successful Single Player RPG series? Make it an MMO. Succesful FPS series? Make. It. An. MMO. All more generic and bland than the last.

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